GV27:

 

tdgeek:

They say rents might increase. It didn’t happen when introduced in other countries. You don’t become a landlord to make money from rents. Because you don’t make a worthwhile income from rents. You rent houses to make a capital gain, no other reason. That will become less worthwhile if you have to pay tax on that so some may sell. More likely the fact that house price increases now will take a long while to occur, so time to bail. The sale prices drop. Rents are already high and you can’t get blood from a stone.

 

How many of those countries brought their CGT in at a time of a massive rental shortage? 

 

Again, there's no point in renting houses to make a capital gain anymore. If you think there isn't going to be upwards pressure on rents from ring-fencing then I have a bridge to sell you. The whole approach to property investment will change, and people keep trying to justify future changes to the tax system based on things that aren't even relevant anymore. 

 

Wbats the rental shortage here? Is it chronic?  Unless 50,000 houses have been demolished and 50,000 families have arrived, not a lot changes year on year. The issue is the higher rents. Higher property prices mean higher rents to maintain a similar yield. We dont have 50000 families living on park benches. Vancouver and Hong Kong from what I recall were two of the cities in the article I read, they had no rent crisis. Like us they had gone through a boom period. 

Given that housing stock is largely unchanged, and population is largely unchanged the base parameters are still there. But people are paying higher rents. If they get scared of CGT based rent increases, they will have 2+ years to wangle themselves into a new home. It could be a new subdivision, it could be Kiwibuild, it could be the some, or a few, or many landlords that aim to quit the properties by April 2021. Builders will see this as a boom, people want out of renting as they are scaremongered. Smart developers will say build now, we will rent to buy, you can pay lower than marker rent as we will add the shortfall to the house, we are all happy. I can see all this happening.

Landlords can't beat CGT, rent wise. If a 600k house they feel will rise 2% p.a that's  $12000 per year. The will need to increase rent by $70 per week, there is no budget left for that for most people who are already paying higher rents. So, some will quit. As a bonus there may be some DIY specials from that. The market will sort it out. There is no more rent money left. I doubt house prices will move much anyway medium term as right now the interest rates are very low, which helps the market, but the prices are already too high. There is no reason they can just keep rising medium term, another reason to sell now and pocket the tax free gain.

There is no more rent money left.